Securities And Exchange Commission v. Torchia et al

Filing 115

OPINION AND ORDER that Torchia, Celello, and Berman shall, on or before May 25, 2016, execute an assignment to CNC of each of the Policies in substantially the form attached as Exhibit A to this Order, and shall execute any other document as may be r equested by the Receiver or an insurer to perfect an assignment of the Policies to CNC and the Receiver. IT IS FURTHER ORDERED that an assignment of Berman's 33.33 percent beneficiary interest in Banner Life policy number 180308844 is not required. Signed by Judge William S. Duffey, Jr on 5/23/2016. (Attachments: # 1 Exhibit A)(anc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.

1:15-cv-3904-WSD

JAMES A. TORCHIA, CREDIT
NATION CAPITAL, LLC, CREDIT
NATION ACCEPTANCE, LLC,
CREDIT NATION AUTO SALES,
LLC, AMERICAN MOTOR
CREDIT, LLC, and SPAGHETTI
JUNCTION, LLC,
Defendants.

OPINION AND ORDER1
This matter is before the Court on the Receiver’s Emergency Motion to
Compel Reassignment of Policies of Credit Nation Capital, LLC into the
Receivership Estate [109] (“Motion”). Al Hill, the Receiver (“Receiver”)
appointed in these proceedings, moves to compel the assignment of property of
Credit Nation Capital, LLC (“CNC”) into the receivership estate. The Receiver

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This Opinion and Order amends the Court’s May 19, 2016, Order [111] to
correct a scrivener’s error brought to the Court’s attention by the Receiver. The
word “Celello’s” on page 4 has been changed to “Berman’s.”

has shown that James Torchia (“Torchia”), Marc Celello (“Celello”), or Lee
Berman (“Berman”) are listed as the named owner, beneficiary, or both of certain
policies listed in Exhibit A to the Receiver’s Motion [109.1] (the “Policies”). The
Receiver has determined that listing Torchia, Celello, and Berman as owner,
beneficiary, or both on the Policies is hampering his ability to assume control and
possession of the assets of CNC pursuant to his duty to take “exclusive jurisdiction
and possession of the Assets, and the property, real and personal, including cash,
securities, receivables, and accounts, of Defendants.”2 ([66] at 75). To expedite
sale of the Policies in the future, the Receiver requests the immediate assignment
to resolve any confusion the insurers may have concerning ownership of the
Policies.
The Court notes further that the records of insurers who issued the Policies
listed on Exhibit A largely show Mr. Torchia as the owner and beneficiary of the
policies, which puts at risk, or at least impedes, the availability of death benefits
that may be payable under one or more of the Policies. This risk includes the
2

The Receiver has determined the assets of CNC are wasting assets. The
policies will become worthless if premiums are not paid. CNC is without
sufficient assets and cannot service the premium payments. Therefore, the policies
must be sold to third-parties who can pay the premiums and keep the life insurance
policies in force. After payment of expenses, the proceeds from the sale of policies
will be applied, as available, for the benefit of investors and creditors of CNC.

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possibility of payment of benefits to Mr. Torchia if he remains the named
beneficiary. The risk of payment of benefits on policies owned by CNC to other
than CNC is enhanced by Mr. Torchia’s refusal to cooperate with the Receiver to
control and manage the Policies at issue.
In managing a receivership, courts sit in equity. In shaping equity decrees,
the Court has broad powers and wide discretion. See SEC v. Elliott, 953 F.2d
1560, 1566 (11th Cir. 1992) (the district court has broad powers and wide
discretion to determine relief in an equity receivership); see also SEC v. Drucker,
318 F. Supp. 2d 1205, 1206 (N.D. Ga. 2004). Under the Court’s April 25, 2016,
Order [66], the Court granted the Receiver broad power to control the assets of
CNC. The Receiver’s request for an assignment of the Policies is in furtherance of
those duties. It is not disputed by Torchia, Celello, or Berman that CNC is the
owner of the Policies.
For the foregoing reasons,
IT IS HEREBY ORDERED that Torchia, Celello, and Berman shall, on or
before May 25, 2016, execute an assignment to CNC of each of the Policies in
substantially the form attached as Exhibit A to this Order, and shall execute any
other document as may be requested by the Receiver or an insurer to perfect an
assignment of the Policies to CNC and the Receiver.

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IT IS FURTHER ORDERED that an assignment of Berman’s 33.33
percent beneficiary interest in Banner Life policy number 180308844 is not
required.

SO ORDERED this 23rd day of May, 2016.

_______________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE

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